Thinking of Starting a Business While Employed in Dubai? Here’s What You Need to Know

Dubai has emerged as a global hub for professionals seeking to explore entrepreneurial opportunities while maintaining their full-time jobs. This growing trend of balancing employment with side hustles reflects the city’s dynamic business environment, driven by its tax-free incentives, world-class infrastructure, and supportive regulatory framework. However, this dual path is not without its complexities, particularly when it comes to navigating the legal and regulatory landscape.

According to legal experts, the entrepreneurial landscape in Dubai is incredibly vibrant, but there’s a critical need for employees to fully understand the legal framework before embarking on their business ventures.?

Recent data highlights Dubai’s appeal as a launchpad for innovative ideas and ambitious projects. According to the Dubai Framework for Cultural Statistics report, the city is home to 40 per cent of start-ups in the region that have secured over $1 million in funding, with more than 300 of these start-ups based in Dubai.? Globally, the trend of starting businesses while employed is on the rise, with over 55 per cent of entrepreneurs beginning their ventures while still working full-time. This trend is particularly pronounced in Dubai, where the combination of a thriving economy and a supportive ecosystem makes it an ideal place to pursue entrepreneurial dreams.

Can You Start a Business While Being Employed in Dubai?

In Dubai, employees are legally allowed to own and operate a business while maintaining their full-time jobs. However, engaging in any form of economic activity requires obtaining the necessary licenses from the relevant authorities. This applies to both mainland and free zone businesses, ensuring compliance with UAE laws and regulations.

For mainland businesses, a license must be obtained from the Dubai Economy and Tourism (DET), while businesses operating within free zones require approval from the respective free zone authority. These licenses are mandatory and carrying out business activities without them is considered unlawful and can result in penalties.

One critical consideration for employees is the potential requirement of a No Objection Certificate (NOC) from their employer. An NOC serves as formal approval, confirming that the employee’s side business does not conflict with the interests of their primary employer. The need for an NOC varies depending on the free zone and the nature of the business activity. In some cases, free zone authorities may mandate an NOC before issuing a trade license.

Employment Contracts and Restrictions: Key Considerations for Side Hustles

One of the most critical factors to consider when pursuing a side hustle while employed in Dubai is the employment contract. Most employment contracts in the UAE include clauses that restrict employees from engaging in business activities outside their primary job responsibilities. Understanding these restrictions is essential to avoid legal and professional complications.

Non-Compete Clauses: Non-compete clauses are a common feature in UAE employment contracts. These clauses prohibit employees from directly or indirectly competing with their employer during their employment and, in some cases, for up to two years after termination. This includes restrictions on approaching clients, suppliers, or fellow employees for competitive purposes.

Under Federal Decree Law No. 33 of 2021, these clauses are legally enforceable, making it crucial for employees to ensure their side hustle does not conflict with their employer’s business interests.

Prohibition on Outside Business Activities: Many employment contracts explicitly state that employees cannot engage in external business ventures without obtaining prior written consent from their employer. This requirement is designed to prevent conflicts of interest and ensure employees remain fully committed to their primary job responsibilities.

Time and Resource Allocation: Employment contracts often require employees to dedicate their working hours solely to their jobs. Engaging in a side hustle that interferes with work hours or utilises company resources (such as equipment, data, or intellectual property) could constitute a breach of contract, leading to disciplinary action or even termination.

Obtaining Written Approval from the Employer: A Crucial Step

For employees in Dubai looking to start or own a business while maintaining their full-time job, obtaining written approval from their employer is often a mandatory step.?

This requirement is particularly important if a No Objection Certificate (NOC) is needed to secure a trade license. Failing to obtain the necessary consent can lead to serious consequences, including termination of employment and revocation of the employment visa.

Why Written Approval Matters

Contractual Obligations: Many employment contracts in the UAE include clauses that require employees to seek formal approval before engaging in any external business activities. This ensures that the side hustle does not conflict with the employer’s interests or violate any terms of the employment agreement.

NOC for Trade Licenses: In cases where a NOC is required by free zone authorities or the Dubai Economy and Tourism (DET), written approval from the employer becomes a prerequisite for obtaining a trade license. Without this, the business cannot legally operate.

Avoiding Conflicts of Interest: Written consent also helps clarify the scope of the employee’s side business. Employers may impose restrictions on the type of business an employee can run, especially if it overlaps with the employer’s industry or poses a potential conflict of interest.

Risks of Proceeding Without Approval

The Ministry of Human Resources and Emiratisation (MOHRE), which regulates employee-employer relationships in the UAE, enforces strict guidelines regarding external business activities. Employees who register a company without obtaining their employer’s consent may face serious consequences. Breaching contractual terms could result in immediate termination of employment. Additionally, the employee’s residency visa may be revoked, impacting their legal status in the UAE. In some cases, MOHRE might even prevent the employee from being registered with future employers, creating significant barriers to their career prospects in the country.

Conclusion

Pursuing a side hustle while working full-time in Dubai is an exciting opportunity, but it comes with its own set of challenges. From understanding employment contract restrictions to securing the necessary approvals and licenses, the process requires careful planning and compliance. Ensuring your side hustle aligns with UAE regulations and avoids conflicts of interest is crucial to maintaining both your job and your business aspirations.

This is where Vista Business Setup can make all the difference. Specialising in company formation, they offer expert guidance to help you navigate the complexities of setting up a side hustle—whether it’s on the mainland, in a free zone, or offshore. From obtaining trade licenses to ensuring compliance with local laws, their team provides tailored solutions to help you launch and grow your venture with confidence. With Vista Business Setup by your side, you can turn your side hustle into a thriving reality while staying focused on your full-time career.